Covalon Technologies

COV.V

Biotechnology · Healthcare

Price

C$2.05

+0.00 (+0.00%)

Market Cap

C$56.6M

Exchange

Toronto Stock Exchange Ventures

Winston Score

Winston is serious

Mixed quality — meaningful strengths and weaknesses.

Share count rising — dilution

+8.0% over 4y

The company has issued more shares over this period, which dilutes each existing shareholder’s stake.

Diluted shares outstanding: 25.8M (2021) → 27.9M (2025)

Covalon Technologies is a Canadian medical device company that makes advanced wound care and infection prevention products. Its core offerings include antimicrobial wound dressings, IV site care products, and medical-grade silicone-based coatings used in hospitals and healthcare facilities. The company sells primarily to healthcare providers, with a significant portion of revenue coming from large contracts with the U.S. military and government health agencies.

Covalon earns money by selling its medical products directly to hospitals, government agencies, and distributors, rather than through subscriptions or licensing. It operates mainly in North America but has some international reach. With a gross margin around 53%, the business has reasonable pricing power built on proprietary coating and antimicrobial technologies, which act as a modest competitive barrier. The main growth driver is expanding its government and institutional contracts, while the key risk is its small size and dependence on a limited number of large customers, which can make revenue unpredictable from year to year.

Winston Score History

Score breakdown

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Quality

Gross Margin

59.1%

Premium pricing power — 59.1% gross margin

Operating Margin

10.5%

Modest — 10.5% operating margin

ROCE

3.3%

Weak — 3.3% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY

-0.0%

Shrinking sales (-0.0% YoY)

EPS YoY

-50.3%

Earnings shrinking (-50.3% YoY)

Earnings per share down more than 10%. Either a bad year, or a real decline.

EPS Consistency

2/8 quarters

Earnings rarely grow — volatile business

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Cash Flow

Cash Conversion

52%

Weak — only 52% of profit becomes cash

FCF Margin

0.6%

Thin free cash flow (0.6%)

FCF margin between 0% and 10%. Some cash from sales, but not a lot.

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Stability

Debt / Equity

N/A

Data not available

Interest Cover

100.00x

Comfortably covers interest (100.0x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

P/E Ratio (TTM)

29.0x

Growth-priced — P/E 29.0

P/E above the market average. People are paying up for expected growth.

P/E vs Forward

+15.3

GROWING

Earnings expected to grow meaningfully — cheaper on forward P/E (29.0 → 13.7)

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Dividends

Dividend Yield

7.32%

Healthy income — 7.32% yield

Yield above 6% — often a flag the market is pricing in a cut.

Dividend Growth

N/A

no trend

Data not available

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